Qualcomm Incorporated v. Apple Incorporated

Filing 177

ORDER on Motion to Stay [Doc. No. 160 ]. Signed by Judge Cathy Ann Bencivengo on 8/29/2018. (anh)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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QUALCOMM INCORPORATED,

Case No.: 3:17-cv-2403-CAB-MDD

Plaintiff,

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v.

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ORDER ON MOTION TO STAY
[Doc. No. 160]

APPLE INCORPORATED,
Defendant.

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Defendant Apple, Inc., has filed a motion to stay litigation while the patents at issue

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are under petition for Inter Partes Review (“IPR”) by the U.S. Patent Trial and Appeal

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Board (“PTAB”) of the U.S. Patent and Trademark Office (“PTO”). The Court finds the

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motion suitable for determination on the papers submitted and without oral argument in

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accordance with Civil Local Rule 7.1(d)(1). For the reasons set forth below, the motion

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is granted.

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I.

Background

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On November 29, 2017, plaintiff Qualcomm Inc., filed a complaint against Apple,

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asserting infringement of United States Patents Nos. 8,683,362 (“the ‘362 patent”);

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8,497,928 (“the ‘928 patent”); 8,665,239 (“the ‘239 patent”); 9,203,940 (“the ‘940

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patent”); and 7,844,037 (“the ‘037 patent”). [Doc. No. 1.] Following a joint motion to

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extend Apple’s time to file a responsive pleading, Apple answered on January 22, 2018.
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[Doc No. 51.] The Court held a case management conference on February 7, 2018, at

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which time Apple represented it intended to seek IPR on all of the asserted patents and

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indicated an expectation of filing the applications with the PTAB within the next two

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months. [Doc No. 64.]

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The parties were directed to proceed with the exchange of infringement and

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invalidity contentions pursuant to this District’s Local Patent Rules. Dates were set for the

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filing of claim construction briefs, and a tutorial and claim construction hearing was

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scheduled for October 10 and 11, 2018. On July 31, 2018, however, Apple filed the instant

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motion [Doc. No. 160] for a stay based on its filed applications for IPR of all the patents

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asserted in the litigation. Qualcomm filed an opposition to the motion to stay on August

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21, 2018. [Doc. No. 168.] Apple filed a reply on August 28, 2018. [Doc. No. 176.]

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Apple has petitioned for review of all the asserted claims of the five patents at issue

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in this case with the exception of two asserted claims in the ‘928 patent. The PTAB’s

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decisions whether to institute will not issue until approximately January 2019 and may not

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result in institution of IPR as to any of the patents. Nevertheless, the Court finds it a prudent

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exercise of resources to temporarily stay this matter until the PTAB decides whether to

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institute IPR.

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II.

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Courts have inherent power to manage their dockets and stay proceedings. The party

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seeking a stay bears the burden of showing that such a course is appropriate. See Landis

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v. N. Am. Co., 299 U.S. 248, 255 (1936). A stay pending an administrative proceeding is

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not automatic; rather, it must be based upon the circumstances of the case before the court.

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See Comcast Cable Commc’ns Corp. LLC v. Finisar Corp., No. 06-cv-04206-WHA, 2007

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WL 1052883, at *1 (N.D. Cal. Apr. 5, 2007) (“From a case management perspective, the

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possible benefits must be weighted in each instance against the possible drawbacks.”).

Legal Standard

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Courts generally consider three factors to determine whether to impose a stay

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pending parallel proceedings in the PTAB: (1) whether a stay will simplify the issues in

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question and trial of the case; (2) whether discovery is complete and a trial date set; and
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(3) whether a stay would unduly prejudice or present a clear tactical disadvantage to the

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nonmoving party. TAS Energy, Inc. v. San Diego Gas & Elec. Co., No. 12-cv-2777-GPC-

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BGS, 2014 WL 794215, at *3 (S.D. Cal. Feb. 26, 2014) (citing Telemac Corp. v.

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Teledigital, Inc., 450 F. Supp. 2d 1107, 1111 (N.D. Cal. 2006)). Judicial consideration is

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not limited to these factors, but rather can include a review of totality of the circumstances.

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A court’s consideration of a motion to stay should be guided by “the liberal policy in favor

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of granting motions to stay proceedings pending the outcome of USPTO reexamination or

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reissuance proceedings.” ASCII Corp. v. STD Entm’t USA, Inc., 844 F. Supp. 1378, 1381

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(N.D. Cal. 1994).

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III.

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A. Simplification of Issues and Trial

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Apple has petitioned for review of all the asserted claims of the patents at issue, with

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the previously noted exception of two claims of the ‘928 patent. Decisions whether to

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institute on each of these petitions will necessarily impact the scope of the issues for

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litigation and trial. Should the PTAB institute on any one or more of the petitions, those

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patents and all their asserted claims will be subject to review “in accordance with or in

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conformance to the petition.” SAS Inst., Inc. v. Iancu, 138 S.Ct. 1348, 1355 (2018)

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(whether to institute an inter partes review is a binary choice – “either institute review or

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don’t”). As a result, for any petition on which the PTAB institutes IPR, each of the

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challenged claims will either (1) be confirmed, estopping Apple from asserting invalidity

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challenges in this case that it raised or could reasonably have raised in the IPR, or (2) be

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invalidated, reducing the number of issues before the Court.

Discussion

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This factor weighs in favor of a limited stay of proceedings until the PTAB issues

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its decisions on whether to institute IPR. See e.g., Wi-Lan Inc. v. LG Elecs. Inc., No. 3:17-

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cv-00358-BEN-MDD, 2018 WL 2392161, at*2 (S.D. Cal May 22, 2018) (while review is

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not guaranteed and, therefore, the benefits of review are only speculative at this juncture,

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in light of the Supreme Court’s mandate to review all contested claims upon a grant of IPR

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and the complexity of this case the Court finds this factor weighs in favor of a limited stay);
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Nichia Corp. v. Vizio, Inc., SA CV 18-00362 AG (KESx), 2018 WL 2448098, at *2-3 (C.D.

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Cal. May 21, 2018) (Vizio filed IPR petitions on all the asserted claims, and although the

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potential for simplification was speculative at the time, the Court determined the stay

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would be relatively short and the action could continue with minimal delay if institution

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was denied); Am. GNC Corp. v. LG Elecs. Inc., No. 3:17-cv-1090-BAS-BLM, 2018 WL

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1250876, at *3 (S.D. Cal. March 12, 2018) (if the court were to wait for the PTAB to accept

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the IPR petitions before staying the case, the court risks wasting resources; the limited

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nature of a stay outweighs the risk of unnecessary expenditure of resources before the

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determination to institute or not).

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In this case with five patents and numerous claims at issue, the PTAB’s decisions

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whether to institute will impact the contours of the case. If the PTAB institutes and cancels

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all the asserted claims of any patent, it will remove that patent from the case, thereby

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significantly reducing the scope of this litigation. Alternatively, if the PTAB declines to

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institute or institutes and confirms any patent, statutory estoppel may simplify the assertion

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of invalidity defenses. This factor favors a temporary stay.

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B. Timing

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Regarding the stage of the proceedings, courts consider timing issues such as

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whether discovery is complete, the status of claim construction, and whether a trial date

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has been set. Universal Elecs., Inc. v. Universal Remote Control, Inc., 943 F. Supp. 2d

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1028, 1030-31 (C.D. Cal. 2013). Since the case management conference in February 2018,

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the parties have engaged in motion practice regarding the pleadings, including a motion for

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judgment on the pleadings challenging the patentability of the ‘362 and ‘239 patents, under

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35 U.S.C. § 101, which the Court denied without prejudice. [Doc. No. 143]. They have

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exchanged infringement and invalidity contentions, provided discovery responses, and

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submitted briefing for the claim construction hearing. The Court is cognizant of the

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resources expended by the parties to prepare for the scheduled claim construction hearing,

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but the hearing has not occurred yet and the Court has not construed the claims. Moreover,

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Qualcomm’s submissions to the PTAB in response to Apple’s IPR petitions may inform
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the construction of disputed claim terms. See Core Optical Techs, LLC v. Fujitsu Network

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Commc’ns, Inc., No. SA CV 16-00437-AG (JPRx), 2016 WL 7507760, at *2 (C.D. Cal.

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Sept. 12, 2016) (even if no patent claim is eliminated, the intrinsic record developed during

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the IPR may inform on issues like claim construction).

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Significant fact and expert discovery and dispositive motion practice are still ahead.

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A pretrial conference is presently scheduled for June 2019, but no trial date has been set.

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[Doc. No. 102.] Trial is not imminent and the majority of fact and expert discovery is still

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to be completed. The stage of the proceedings does not weigh against issuing a temporary

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stay. See, e.g., TAS Energy, Inc., 2014 WL 794215, at *3 (“While the case is not in its

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early stages, it is in the midst of discovery and no trial date has been set. Moreover,

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significant amount of work still remains such as expert discovery, summary judgment

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motions and trial.”); PersonalWeb Techs, LLC, v. Facebook, Inc., Case Nos. 5:13-CV-

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01356-EJD; 5:13-CV-01358-EJD; 5:13-CV-01359-EJD, 2014 WL 116340, at *4 (N.D.

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Cal Jan. 13, 2014) (stating that case was not so far advanced that a stay would be improper

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where parties had not yet engaged in significant costly work of expert discovery and

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summary judgment motions, and the pretrial conference was still six months away); Am.

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GNC Corp., 2018 WL 1250876, at *2 (that the parties have completed certain benchmarks

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under the Patent Local Rules does not mean the case has progressed so significantly that a

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stay would be improper).

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This factor favors a temporary stay.

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C. Undue Prejudice or Clear Tactical Advantage

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Despite the fact that the petitions were not filed as expeditiously as anticipated in

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Apple’s case management statement [Doc. No. 64], based on the number of patents and

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claims involved, the Court does not conclude that the additional time taken to prepare and

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file the applications was the result of tactical delay. Moreover, a delay inherent in the

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reexamination process does not constitute undue prejudice. AT&T Intellectual Prop. I v.

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Tivo, Inc., 774 F. Supp. 2d 1049, 1054 (N.D. Cal 2011); Research in Motion Ltd., v. Visto

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Corp., 545 F. Supp. 2d 1011, 1012 (N.D. Cal. 2008) (mere delay in the litigation does not
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establish undue prejudice). Finally, because Apple and Qualcomm are not direct

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competitors, any harm from a stay can be addressed through damages. PersonalWeb

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Techs, LLC, 2014 WL 116340, at *5.

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This factor favors a temporary stay.

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IV.

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The Court finds Apple’s motion for stay timely and that staying this case will not

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cause Qualcomm undue prejudice. Further PTAB’s decisions to institute IPR may simplify

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the case and may further inform the Court on matters of claim construction. Apple’s

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motion for a stay is therefore GRANTED pending the PTAB’s decisions whether to

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Conclusion

institute IPR.

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As the Court has previously noted, the patents in this case are diverse. They are from

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unrelated families and cover divergent technologies. The PTAB may decide to institute

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IPR as to all, some, or none of these patents. The litigation is hereby stayed until those

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determinations are made. As the patents do not overlap and are independent of each other,

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litigation will commence again immediately for any patents on which IPR is not instituted,

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and the Court will promptly reschedule the claim construction hearing as to those patents.

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The parties shall jointly notify the Court immediately of the PTAB’s decisions whether to

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institute as to each patent as the decisions are individually received.

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It is SO ORDERED.
Dated: August 29, 2018

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